When I read or hear an economic report about building permits, housing prices, consumer spending, jobless claims, GDP, inflation, stock prices, etc., it always leaves me wondering: What does this data mean to a city?
Well, based on current numbers, San Jose shouldn’t expect any significant increase of our No. 1 revenue source, property tax, for several years. Property values have dropped or are stagnant, and no windfall is waiting in the wings for San Jose.
The Case Shiller index has tracked residential property values nationwide for approximately 10 years. It also tracks specific regions of the country, including our own. San Jose’s breakdown of land is roughly 85 percent residential and 15 percent commercial/industrial. I contacted the County Assessor’s office about the Case Shiller index and asked if Santa Clara County has tracked the index. The answer was yes. Local residential real estate has followed the index, so Case Shiller appears to be an indicator to watch for future property tax revenues in San Jose.
Compared to past quarters, San Jose may see some increase in sales tax revenues in the short term—the state lags in the reporting by several months. However, any increase in sales tax will have to plug the $2.8 million hole that was created by the state after the budget was balanced in San Jose. By not extending vehicle license fees, cities across California lost $130 million in revenue.
Consumer spending is difficult to predict. Will you or your friend purchase anything substantial this week? A car, appliances, expensive jewelry? These purchases are made based on confidence in having a job or moving into a new home. If there is a lack of confidence or not many people moving into new homes, this will result in lower sales tax revenues to cities. The savings rate for Americans has increased greatly over the last year, which is a good thing for the long term since individuals, in addition to government, are over-leveraged.
It seems the last decade of economic growth was based greatly on borrowing. And now, no longer being able to borrow/spend at that same rate will translate to anemic economic growth. It is a good idea for cities to be conservative with sales tax revenues for budget planning, because an increased savings rate for consumers sustained over time will decrease spending.
As far as an upside in the utility tax, that depends on how many buildings are occupied by employees and the rate of consumption of electricity, water and gas (not gasoline for automobiles). Thus, the more vacant buildings are occupied,the more utility tax will be generated. Consumption also has to be balanced. Government is trying to promote energy efficiency, which is a good thing, however, it could translate to lower utility taxes over time. But you can expect a slight uptick in utility tax revenue from December with all of the holiday lights.
Other indicators at the macro level have an effect on San Jose but are harder to trace to direct revenues, like property tax, sales and utility tax. We will continue to walk a tightrope between tax revenue and services that can be provided for years to come.
On a final note, last week I attended the Rancho del Pueblo Golf course community meeting. One comment made by a staff person for Supervisor George Shirakawa was particularly interesting. The person said the city should sell the San Jose Municipal Rose Garden. Well, certainly the city could propose selling anything, but the first thing to point out is that selling any park in San Jose requires approval by voters. Another point is that there is no mortgage payment on the award-winning Rose Garden. The park land, a former prune orchard in 1928, has no outstanding debt. This is completely different from the golf courses, which the general fund must subsidize by paying back bonds that were issued without voter approval to purchase the land.
Shirakawa is rather poorly endowed in the brain department. Only a dimwit would ask such a question.
Notwithstanding all that you say about City revenue, the cost side of the equation will continue to worsen each time the City Council authorizes more residential zoning. Were Council Members even just a little brighter than a small appliance light bulb, they’d reject the “greasola” and deny any additional residential construction.
LOL. Shirikawa didn’t ask that question. Read it again.
It’s funny how you can arrogantly question other people’s intelligence, when you can’t even read the article properly. Keep ‘em coming, Greg! You are one clever guy. Really, you are.
You are correct, my apologies to Mr. Shirakawa. I think it must be my jaded attitude regarding politicians that drives me to pounce as I did… alas that is no excuse for sloppiness on my part.
However, Mr. Shirakawa should probably give some thought to upgrading his staff.
PO: What you did’nt mention was, the cost of maintaining the Rose Garden and other Parks? My question to you is; what is more important maintaining a park or getting more Police and Firefighters back for Emergency Services? Your answer tells me whether or not you are fit for Council!
SJ Resident,
With all due respect, we should not be in an “either/or” situation. We should not have to pick and choose one service over the other. We need Police/Fire AND parks, pools, community centers, libraries and other public amenities. (Did I mention they should be open/maintained as well? No? Well, they should be.) People will not want to move here or come here to spend time (and $$) if all San Jose has to offer are Police and Fire (no matter how wonderful and hard working they are).
I, for one am very grateful we have Council members like Pierluigi who think practical, think long term and are willing to tell it like it is.
My .02.
Tina
You’re correct, nobody and no business is going to settle in SJ just because of its police and fire departments.
You want to know how “it is?” PLO doesn’t have a clue!!!
nothing is going to come here because of the parks, the pools, libraries or other “public amenities.”
AND they certainly arent going to come to San Jose to work or play or SPEND knowing they will have to pay higher sales taxes higher property taxes, higher SEWER/WATER fees AND THEN HAVE TO DEAL WITH THE FREAKIN OUT OF CONTROL CRIME.
They “they’s” that are coming to San Jose are criminals from out of town the pimps and the prostitutes, the robbers prowing downtown , the drug dealers…. and guess what Tina: they arent here checking out books or fouling the pools.
It will recover when you grow the downtown core with more offices and corporate headquarters of high tech firms relocating there. The high tech companies are traitor to our region by abandoning the city’s core. A lot of new housing needs to be built in the downtown core, not North San Jose. No new revenue unless the business and political community get its act together.
It will recover when you and the rest of the council come to your senses. Get rid of the majority of the bars.
No one wants to come downtown and spend money, unless you want to get drunk and fight, sell drugs or pay crazy parking fees.
Tine for a change!
It will recover when you and the rest of your cohorts on the Council learn that business within the City of San Jose is a good thing, and you then start reducing the regulatory burden that gets in the way of attracting profitable, tax-paying businesses to San Jose.
Of course, in so doing you may have to confront the Labor Council, or the Builder’s Lobby, or the city employee’s union, or NIMBYs, or several other pressure groups that like the status quo, but that is sometimes the price of leadership.
High tech and other business do what is logical and profitable for them so many do not locate in San Jose or more after start up because:
1) Council and City Hall is business unfriendly unless you are very large or pay costly consultants
2) higher business taxes and utilities costs than local SV cities and going higher each year
3) Other cities do not have business district improvement fees and nicer districts
4) downtown problems, crime and many other SJ business areas do not have desired restaurants, stores, services etc compared to local cities
5) budget deficits mean more and higher business taxes, fees, permits etc and less services
6) higher property and auto crimes with slow or not response or investigation so same criminals will do more crime
7) poor public transit to most SJ desired business locations except undesired downtown
8) many layers of SJ laws, regulations, permits – Council, Planning Commission, city bureaucrats, redevelopment, business districts and neighborhoods to make happy to get complex permits and approvals – very time consuming and costly except for simple permits and than days in person instead of hours or online approval with simople forms or no approval needed Most SJ city business forms are excuse or way to collect more money nothing else, no benefit to businesses just unneeded time and money
9) public safety layoffs and little service very troubling
10 SJ business climate is deteriorating from poor city and Chamber leadership
25 years lived and work in San Jose but when economy get better moving business to Campbell or Santa Clara – had it with stupid business attitudes, time consuming forms and approvals, higher costs and few services and Council more interested in politics than doing right thing for business who pay more for city government than residents
Wall Street Journal – Public Courses Get Mired in Golfing Slump
Once Seen as a Municipal Money Maker, Links Have Become a Financial Burden for Cities as the Sport’s Popularity Slips
Already struggling to balance their budgets in the face of falling revenue, Bay Area cities have been pushed deeper into the financial rough by the golfing bust.
In Mountain View, the city council is discussing how to reverse the $700,000 annual loss being racked up by the public Shoreline Golf Links.
San Jose officials are considering selling one of that city’s three public courses to find new money for police and libraries and pay down about $27 million in golf-related debt.
City-owned courses in Mill Valley and Alameda also have been operating in the red.
“Before, golf was the big …
http://online.wsj.com/article/SB10001424053111903639404576516453159248880.html?mod=djemSFBA_h
The Case-Shiller San Francisco Index only covers Alameda, Contra Costa, Marin, San Francisco, and San Mateo counties. Isn’t San Jose in Santa Clara county?